Saab’s results January-September 2017

Press releaseFinancial reportStock Exchange Release

24 October 2017

Defence and security company Saab presents the results for January-September 2017.

Statement by the President and CEO Håkan Buskhe:

Focus on efficiency In large parts of the world we are seeing further increases in defence spending and bigger investments in civil security than before. In times of complex threat scenarios, it is clear that the borders between what has traditionally been regarded as a military or civil threat are gradually being erased. Saab’s capabilities in systems integration, sensors and cybersecurity are therefore growing in demand.

International venturesDuring the third quarter, we joined Adani Group of India to announce a collaboration plan within aerospace and defence. The intended collaboration aligns with the Indian government’s “Make in India” initiative and could encompass design, development and production of Gripen and other high-tech products. We also announced a plan to establish manufacturing capabilities for the T-X trainer aircraft in the US, should Boeing and Saab win the competition for this aircraft in the US.

Order bookings During the first nine months of the year, order bookings increased to MSEK 24,255 (14,960). Major orders were received in several areas, including two in airborne surveillance and one for the Next generation Light Anti-Tank Weapon system (NLAW), to the Swiss Army. Sweden ordered the development and production of the next generation anti-ship missile, the modification and upgrading of the Gävle-class corvettes, a new signal intelligence vessel, and continued support and maintenance of Gripen C/D.

During the period, we received a number of small and medium-sized orders, including a three-year contract extension with the UK Ministry of Defence for the provision of Tactical Engagement Simulation (TES). In collaboration with Lockheed Martin, we also received an order for a training system for the U.S. Army.

The order backlog amounted to MSEK 109,406 at the end of the period.

Sales growth Sales increased by 10 per cent compared to the same period in 2016. Several business areas saw strong growth in the period.

Operating income amounted to MSEK 1,273 (837) with an operating margin of 5.9 per cent (4.3). The improved operating margin is mainly attributable to stronger income in the business area Dynamics and a higher activity level related to airborne surveillance systems and support operations. We continue to focus on efficiency improvements in operations.

Operational cash flow amounted to MSEK -758 (1,922), in line with our expectations, as we had a strong positive cash flow in 2016 due to large advances and milestone payments that have not been repeated, at the same time that the activity level remains high.

Earnings per share after dilution amounted to SEK 8.29 (4.76).

AustraliaIn early October, Saab was identified by the Australian government to provide the tactical interface to the Royal Australian Navy’s fleet of nine Future Frigates. Saab was also named as the supplier of the 9LV Combat Management System for the upcoming programme, including Offshore Patrol Vessels.

Outlook statement for 2017: We estimate that sales growth in 2017 will be higher than Saab’s long-term financial goal: annual organic sales growth of 5 per cent.

We expect the operating margin, excluding material non-recurring items, to improve compared to 2016 and thus the company will take a step towards its financial goal: an operating margin of 10 per cent.

Financial highlights

MSEK

Jan-Sep 2017

Jan-Sep 2016

Change, %

Q3 2017

Q3 2016

Full Year 2016

Order bookings

24,255

14,960

62

3,701

3,498

21,828

Order backlog

109,406

109,521

-

107,606

Sales

21,575

19,615

10

6,222

5,761

28,631

Gross income

5,043

4,432

14

1,575

1,352

6,883

Gross margin, %

23.4

22.6

25.3

23.5

24.0

EBITDA

1,910

1,537

24

597

462

2,743

EBITDA margin, %

8.9

7.8

9.6

8.0

9.6

Operating income (EBIT)

1,273

837

52

388

226

1,797

Operating margin, %

5.9

4.3

6.2

3.9

6.3

Net income

919

536

71

260

122

1,175

of which Parent Company’s shareholders’ interest

890

509

75

248

113

1,133

Earnings per share after dilution, SEK 1)

8.29

4.76

2.31

1.06

10.60

Return on equity, % 2)

11.9

13.8

9.0

Operational cash flow

-758

1,922

-315

-2,271

2,603

Free cash flow

-920

1,740

-388

-2,311

2,359

Free cash flow per share after dilution, SEK

-8.57

16.28

-3.61

-21.59

22.07

1) Average number of share after dilution

107,357,386

106,875,192

107,470,451

107,024,906

106,906,726

2) Return on equity is measured over a rolling 12-month period.

For more information and explanations regarding the usage of these key ratios, please see http://saabgroup.com/investor-relations/financial-data/key-ratios/

Saab serves the global market with world-leading products, services and solutions within military defence and civil security. Saab has operations and employees on all continents around the world. Through innovative, collaborative and pragmatic thinking, Saab develops, adopts and improves new technology to meet customers’ changing needs.

The information is such that Saab AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07.30 CET on 24 October 2017.